Alone inside my head, Alone inside my room

Alone inside my head, Alone inside my room

Quigley v Masterson [2011] EWHC 2529 (Ch) (07 October 2011)
Introduction
Continuing with his watching brief of current case law Solicitor Mr Anis Waiz of Mohindra Maini LLP http://www.mmsolicitors.co.uk/    provides another guest article.  This case concerned the issue of severance of a joint tenancy by mutual conduct.
Background
This was an Appeal from a Deputy Adjudicator to HM Land Registry, as to whether a beneficial joint tenancy of a dwelling house had been severed before the death of the late Mr Edward Pilkington one of the joint tenants of the property.
Mr Pilkington was a patient of the Court of Protection. One of his daughters, Mrs Angela Quigley, had been appointed as his deputy shortly before his death, with wide powers over his property and affairs she was also the executrix of his will by which he left his entire estate to his seven grandchildren in equal shares.
Mr Pilkington’s marriage had ended when in about 1978 he began to live with Mrs Violet Masterson. They never married but continued living together until 2001 when the relationship broke down. The first property which they lived in together was a flat, which was apparently purchased in Mrs Masterson’s sole name because bankruptcy proceedings were then pending against Mr Pilkington.
In 1991 or 1992 this property was sold and the net proceeds of sale, after discharge of an outstanding mortgage, were applied towards purchase of the house the subject of these proceedings.
The house was conveyed into their joint names, as joint tenants both at law and in equity. They were registered as the joint proprietors. As is standard where there is a beneficial joint tenancy and a right of survivorship which it entailed, no restriction was entered on the register in the familiar form where a property is beneficially owned by tenants in common, that is to say a restriction preventing any disposition by a sole proprietor of the registered estate under which capital money arises unless authorised by an order of the court.
In 2002 upon breakdown of the relationship the parties instructed solicitors. Steps were taken by Mr Pilkington’s solicitors to sever the joint tenancy. In fact this amounted to service, or attempted service, of a written notice of severance pursuant to the proviso to section 36(2) of the Law of Property Act 1925 which provides  that "where a legal estate (not being settled land) is vested in joint tenants beneficially, and any tenant desires to sever the joint tenancy in equity, he shall give to the other joint tenants a notice in writing of such desire …".
Attempted severance of the joint tenancy
The steps taken were as follows:
1          The sending by post of a written notice of severance, dated 16 December 2002 ("the         December notice"), to the solicitors whom Mrs Masterson had previously retained,
2          the preparation in February 2003 of a further notice of severance ("the February    notice"), which it was intended to send under cover of a letter dated 12 February 2003 to Mrs Masterson at her place of work. In fact the letter was addressed to her, with her name mis-spelt as "Mrs Masterton",
So far as the December notice is concerned, it was accepted at the hearing before the Deputy Adjudicator that Mrs Masterson’s solicitors were no longer acting for her at the time when it was sent, and that they had no authority to accept the notice on her behalf. Nor was there any evidence that Mrs Masterson had ever in fact received the notice.
As to the February notice, the Deputy Adjudicator heard oral evidence from Mrs Masterson, her daughter Charlotte, Mrs Quigley and the solicitor who then had conduct of the matter on Mr Pilkington’s behalf, Mrs Tucker.
In the light of that evidence, he was not satisfied that the February notice was ever posted to Mrs Masterson, and (even if it was) he held,  that her workplace could not be treated as her "last-known place of business" in the UK within the meaning of section 196(3) of the Law of Property Act 1925.
He also accepted the clear evidence of Mrs Masterson that she had never received the February notice, and he considered and rejected the various points relied upon as suggesting that she had.
The appeal proceeded on the footing that neither notice was effective to achieve its purpose, and no valid notice of severance was given by Mr Pilkington to Mrs Masterson in 2002/3.
Mr Pilkington’s health began to deteriorate. By 2004, now aged 78, he had developed an incurable neurodegenerative dementia, and in the same year he also underwent surgery for bowel cancer. By 2008 his language was impaired by fluent dysphasia, and his state of health was such that he had to move from the house to a private residential care home. However, there was an improvement in his relationship with Mrs Masterson.
Mrs Quigley made an application to the Court of Protection on 20 April 2008. In her application she asked the court to make a financial order, authorising her to apply her father’s money for his benefit and to sell the house which he owned in equal shares with Mrs Masterson. In section 5 of the application form, headed "Other information", she said "It is intended to sell the house which is owned jointly with former partner, who also wishes to sell".
In February 2003 Solicitors for Mr Pilkington persuaded the Land Registry to enter a restriction on the title of the house, on the footing that a valid notice of severance had been given. Following Mr Pilkington’s death, Mrs Masterson was entitled to be registered as the sole legal proprietor of the house, because the legal estate had passed to her by survivorship; but she also applied to the Land Registry in August 2009 to have the restriction removed, on the ground that the beneficial joint tenancy had never been validly severed by either the December notice or the February notice.
By an unfortunate mistake, the Land Registry then gave effect to this application, and removed the restriction, without giving notice of the application to Mrs Quigley.
The Land Registry Proceedings.
Mrs Quigley sought to argue the joint tenancy had been severed was put in two ways. First severance had been effected by the giving of the February notice. That was rejected and there was no appeal against that decision.
The second argument relied on the mutual conduct of Mr Pilkington and Mrs Masterson, and the third method specified by Sir William Page Wood V.-C. in his classic statement of the ways in which a joint tenancy of personal estate could be severed before 1926, namely "by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common" (Williams v Hensman (1861) 1 J. & H. 546 at 557, a statement of the law which "is always treated as authoritative: see Megarry & Wade, The Law of Real Property, 7th edition (2008), p.505, footnote 150).
As to mutual conduct the Deputy Adjudicator referred to Gray’s Elements of Land Law, 5th edition, paragraphs 7.4.89 to 7.4.97, which both sides were content to accept as accurate:
"Mutual conduct has been taken to comprise any conduct of the joint tenants which falls short of evidencing an express or implied agreement to sever but which nevertheless indicates an unambiguous common intention that the joint tenancy should be severed. What is required is a consensus between the joint tenants, disclosed by a pattern of dealings with the co-owned property, which effectively excludes the future operation of the right of survivorship."
Counsel for Mrs Quigley argued that the necessary mutual conduct was established by:
a) proposals for settlement suggested by Mrs Masterson’s solicitors, in a letter dated 15 May 2002, and subsequent correspondence;
b) the improbability that a couple no longer in a relationship would wish to benefit each other when the first of them died; and
c) the common understanding in the Court of Protection proceedings that each party had a 50% interest in the house.
The Deputy Adjudicator rejected the first two ways of putting the case.  He held it was established that negotiations falling short of an agreement could not  constitute a severance; and although he did not expressly comment on the second argument, it is clear that a mere generalised probability of that nature could not of itself form part of a pattern of dealings with the house or indicate an unambiguous common intention in favour of severance.
The third way of putting the case, however, did in his view raise a serious issue, and he set out the relevant facts, as he found them.  From various facts surrounding the appointment of Mrs Quigley as a deputy for the Mr E Pilkington property & Affairs he held there had been no severance of the joint tenancy by mutual conduct at the time of Mr Pilkington’s death.
The essence of the Deputy Adjudicator’s reasoning was
1          no course of dealing or common intention in favour of severance could be spelt out from the Court of Protection proceedings, because Mr Pilkington himself lacked capacity and Mrs Quigley had no authority in law to speak or act on his behalf until her appointment as his deputy.
2          She would then have had authority to decide on his behalf how the proceeds of sale of the house should be divided, and as the Deputy Adjudicator found she would probably have agreed on an equal division of the net proceeds with Mrs Masterson. Unfortunately Mr Pilkington’s death intervened before this could happen, and Mrs Quigley’s inactivity in the week between her appointment and his death could not by itself demonstrate the necessary common intention.
The Appeal
The issue was whether there had been severance of the joint tenancy by mutual conduct. The Deputy Adjudicator said he had been unable to accept the argument "that the appointment of Mrs Quigley in itself converted what had been ineffective conduct into effective conduct",  
As to severance by conduct Mr Justice Henderson noted counsel for Mrs Quigley proffered two analogies, drawn from the law of proprietary estoppel and the law of misrepresentation, where in certain circumstances silence or inaction on the part of a property owner or representor can be tantamount to a positive representation. He referred to the well established principle that a pre-contractual inducement which is true when made, but which ceases to be true to the knowledge of the representor before the contract is concluded, is treated as a misrepresentation unless the representor informs the representee of the change in circumstances: see With v O’Flanagan [1936] Ch.575 (CA.  That was rejected by Mr Justice Henderson who noted that before her appointment Mrs Quigley had no authority to act for, or speak on behalf of, her father.
She was not the holder of an enduring power of attorney, and any authority which Mr Pilkington might have given her while he still had capacity to manage his affairs must have terminated when he lost that capacity. It could not be said that Mrs Quigley’s words or actions before her appointment could be attributed to her father. Nor is there any way, in HHJ Henderson view, in which the mere fact of her appointment could without more have led to her previous words or actions now being treated as spoken or made on her father’s behalf.
It was her duty under the Mental Capacity Act 2005 to make decisions in her father’s best interests (see section 1(5)), having regard to all the relevant circumstances and to the other factors set out in section 4 of the Act. In order to fulfil this statutory duty. He held that it was not an area where mere silence or inactivity can somehow be elevated into, or constitute evidence of, a course of conduct, and certainly not over a period as short as that between Mrs Quigley’s appointment and her father’s death. The Deputy Adjudicator was therefore correct to find that no unambiguous common intention to sever the joint tenancy had been demonstrated during the last week of Mr Pilkington’s life.
Another issue
However what of the application to the Court of Protection? HHJ Henderson held that the application had to be read in the context of the two earlier documents in the proceedings in which she had expressly accepted that she and Mr Pilkington each owned a 50% share in the house, namely her acknowledgement of service dated 11 May 2008 and her witness statement dated 19 September 2008. The application made it clear that Mrs Masterson was seeking authority to obtain a valuation of the house and place it on the market for sale, so that the proceeds could be equally divided between herself and Mr Pilkington, and his share could then be used to pay for his long term care.
He agreed with the Deputy Adjudicator’s comment in paragraph 56 of the Decision that the application "is the clearest evidence that Mrs Masterson was treating the joint tenancy as severed, and expecting the net proceeds of sale to be divided up between the co-owners".
There was no reason why the application could not qualify as a notice of severance under section 36(2) of the Law of Property Act 1925.  It gave unambiguous notice of Mrs Masterson’s present desire to sever the joint tenancy.
It could not be said the application related only to the future and did not necessarily entail a severance. However was the notice treated as having been "given" to Mr Pilkington, pursuant to section 36(2)?
The giving of a notice of severance is essentially a unilateral act, which does not depend in any way on the agreement of the recipient. As Lawton LJ said in Harris v Goddard at 1209B, "[w]hen a notice in writing of a desire to sever is served pursuant to section 36(2) it takes effect forthwith".
It is also material to bear in mind the well established principle that "[t]he policy of the law as it stands today, having regard particularly to section 36(2), is to facilitate severance at the instance of either party": see Burgess v Rawnsley [1975] Ch. 429 (CA) at 448B per Sir John Pennycuick, and compare Harris v Goddard at 1211B per Dillon LJ (with whose judgment Kerr LJ agreed at 1210C.
As to the Appellant’s Counsel’s argument that Mrs Masterson’s application was not served on Mr Pilkington  in any of the ways permitted by section 196 of the Law of Property Act 1925. HHJ Henderson agreed that it cannot be treated as having been served on Mr Pilkington when it was first served on, or otherwise came to the attention of, Mrs Quigley, because she did not at that stage have any authority to act on her father’s behalf.
However the position changed, in his  view, when the court ordered on 3 February 2009 that Mrs Quigley should be made her father’s deputy for his property and affairs. That decision was made after a contested hearing, and must have reflected a decision in principle by the court that Mrs Quigley should be her father’s deputy, even if it was envisaged that a formal order appointing her to act as such would still need to be drawn up (as of course happened on 13 March 2009).
In his judgment it is right to regard Mrs Quigley as having had sufficient authority to receive a notice of severance on her father’s behalf from 3 February 2009 onwards, and since she plainly already knew about Mrs Masterson’s application, and Mrs Masterson had taken no steps to withdraw or modify it, the notice can and should be treated as having been "given" to her at this point for the purposes of section 36(2).
The appeal succeed. Crucially there was an alternative route by which it was properly, and without any unfairness to Mrs Masterson, held that severance of the joint tenancy was duly effected.
A very interesting case on the severance of a joint tenancy where the court clearly wanted to avoid a technical argument being deployed. A novel approach was found around a stringent test.
The last words as ever to the late Mr Stuart Adamson et al .
Alone inside my head
Alone inside my room
I feel Alone inside my head
Alone inside my tiny little world.
Kind regards

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